Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $349,800 of manufacturing overhead for an estimated allocation base of 1,060 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account, $230,000. Raw materials used in production (all direct materials), $215,000. Utility bills incurred on account, $65,000 (85% related to factory operations, and the remainder related to selling and administrative activities). Accrued salary and wage costs: Direct labor (1,135 hours) $ 260,000 Indirect labor $ 96,000 Selling and administrative salaries $ 140,000 Maintenance costs incurred on account in the factory, $60,000 Advertising costs incurred on account, $142,000. Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). Manufacturing overhead cost was applied to jobs, $ ? . Cost of goods manufactured for the year, $830,000. Sales for the year (all on account) totaled $1,500,000. These goods cost $860,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials $ 36,000 Work in Process $ 27,000 Finished Goods $ 66,000 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year.
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies
- Raw materials purchased on account, $230,000.
- Raw materials used in production (all direct materials), $215,000.
- Utility bills incurred on account, $65,000 (85% related to factory operations, and the remainder related to selling and administrative activities).
- Accrued salary and wage costs:
Direct labor (1,135 hours) | $ | 260,000 |
Indirect labor | $ | 96,000 |
Selling and administrative salaries | $ |
140,000 |
- Maintenance costs incurred on account in the factory, $60,000
- Advertising costs incurred on account, $142,000.
Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).- Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities).
- Manufacturing overhead cost was applied to jobs, $ ? .
- Cost of goods manufactured for the year, $830,000.
- Sales for the year (all on account) totaled $1,500,000. These goods cost $860,000 according to their
job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Raw Materials | $ | 36,000 |
Work in Process | $ | 27,000 |
Finished Goods | $ | 66,000 |
4A. Prepare a
4B. Prepare a schedule of cost of goods sold.
5. Prepare an income statement for the year.
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